Russian stocks seen falling early on geopolitical pressure

MOSCOW, May 5 (PRIME) -- The Russian stock market is likely to continue contraction on Thursday morning as there are no positive drivers capable of outweighing the negative impact of the geopolitical factor, analysts said.

“Speaking about the foreign bourses’ mood on Thursday morning, we can say they are positive. The leading Asian bourses gain up to 1.4%, the futures for the main U.S. indices consolidate around Wednesday’s closing, while the closest futures for the Brent oil rose by 0.8% close to U.S. $111 per barrel,” Bogdan Zvarich, senior analyst at financial supermarket Banki.ru, said.

“In spite of the better external background, we expect the Russian shares to continue their negative dynamics, as the geopolitical risks are still the main pressing factor.”

As a result, the MOEX Russia Index may retreat to 2,300–2,350 and test the lower threshold of the range, he said.

“The market has found no reason to resume growth. On the contrary, the market sentiment is in a downward movement due to toughening of the direct and indirect sanction pressure. The export-oriented Russian market also suffers from the negative impact of excessive strengthening of the ruble,” Vasily Karpunin, head of BCS World of Investment’s department for information and research, said.

The outlook on the MOEX Russia Index is neutral, and a scenario of wide-range consolidation with contractions to 2,300 and even below is possible. “The shares of exporters have lost the advantage of the exchange rate, and they will continue moving in unison with the shares of companies that are focused on the internal market,” Karpunin said.

But Vitaly Manzhos, senior analyst at investment company Algo Capital, said that the MOEX Russia Index may start the day with an increase of up to 1.5% in the range of 2,375–2,410 as it would receive support from the technical factors and the positive external background.

“In the second half of the day, only the important geopolitical news can have an impact on the local share market, and it is very likely that they will be connected to sanctions,” Manzhos said.

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